US ad spending expected to drop by 13 percent in 2020, less than financial crisis aftermath

Advertising spending is expected to drop by 13 percent this year, but isn’t expected to be as bad as the decline after the 2008 stock market crash, according to the world’s largest ad buyer.

New York-based GroupM forecasts that ad spending in the U.S. will drop from $238.8 billion in 2019 to $207.9 billion this year due to the coronavirus pandemic. Advertising spending fell 15.8 percent in 2009 after the financial crisis, it noted.

GroupM had expected a rise of 4 percent in ad spending before the pandemic, with election-year spending fueling the increase.

With much of the country under stay-at-home orders in March, April and May, many media outlets experienced substantial increases in ratings and clicks. But many companies cut back on advertising as a result of falling revenue, resulting in many news organizations laying off staff, furloughing workers and/or cutting pay.

The nationwide protests and violence over the police killing of George Floyd in Minneapolis are also creating uncertainty among media companies.

Ad executives tell The Wall Street Journal that some brands are looking to prevent some of its ads from being seen on online news stories that include reference to “Black Lives Matter,” “demonstrations” and “rioting.”

Print publications, which were already struggling well before the pandemic hit, are expected to take the biggest hit, with GroupM predicting a 26 percent drop in print advertising.

A 2019 Pew Research Center analysis found that 31 percent of all daily newspapers had layoffs in 2018, with the number of layoffs in 2018 exceeding those that occurred in 2017.

New York Times Executive Editor Dean Baquet also predicted last year that “most local newspapers are going to die in the next five years.”

“The greatest crisis in American journalism is the death of local news,” Baquet said at the International News Media Association World Congress in New York City in May 2019. “I don’t know what the answer is.”

“Their economic model is gone. I think most local newspapers in America are going to die in the next five years, except for the ones that have been bought by a local billionaire,” Baquet continued.

“I think that everybody who cares about news — myself included, and all of you — should take this on as an issue,” the 63-year-old Pulitzer Prize winner added. “Because we’re going to wake up one day and there are going to be entire states with no journalism or with little tiny pockets of journalism.”

“I’m not worried about Los Angeles and New York. I don’t know what the model is for covering the school boards in Newark, N.J. That makes me nervous,” Baquet added.